A company director has a legal responsibility to keep company records and accounting records. A director must keep records about the company itself, as well as financial and accounting records. You may hire a professional (for example, an accountant) to help with your record keeping.
You must keep records for six years from the end of the last company financial year they relate to, or longer, if:
- they show a transaction that covers more than one of the company’s accounting periods
- the company has bought something that it expects to last more than six years, like equipment or machinery
- you submitted your Company Tax Return late
- HMRC has started a compliance check into your Company Tax Return.
If your accounting period ends on 31 March 2020, you’ll need to keep the records for that period until at least 1 April 2026.
Where am I going to keep all of those files and folders for six years?
The days of keeping your invoices, bank statements and other bits of paper in a dusty old shoebox are more or less a thing of the past.
With the advancement of technology, company records can now be digitised, making it easier and cheaper to store and requiring less physical storage space. In fact, the UK government are working on a new tax programme called Making Tax Digital, which – as the name suggests – aims to move tax returns online (though it won’t remove the need to keep your own backups).
You must, however, keep this information saved and backed up in case of data corruption, damage, loss or theft.
If you don’t retain your records for the required time period, you could be charged a penalty by HMRC. Penalties increase based on the seriousness of the offence – from £250 for a business in its first year of trading to £3,000 for deliberate destruction of records. If you fail to meet your director responsibilities for keeping records, you could be disqualified.
What else do I need to do as a limited company director?
Keeping records is just part of the story; there are also a number of reporting deadlines and filing requirements you’ll need to keep on top of. At Accounting Wise we can help you stay on top of these responsebilities. Call us on 0330 113 8442 or check out our services.